Advice on Accounting for Taxation

Both current and deferred taxation must be fully accounted for under conventions such as IFRS or US GAAP. The advent of these standards has forced many local and international businesses to deal for the first time with the accounting issues involved in correctly disclosing the tax burden on income shown in financial statements drawn up under different principles than those on which the taxable income has been computed. PwC provides support to all businesses during the initial implementation of the new processes and calculating the overall effective rate for the group.

IFRS and US GAAP, require the tax burden of groups to be determined on the basis of the consolidated financial statements using the "effective tax rate". It is important to understand the effects this has on systems and processes and on the attitudes of employees now called upon to adopt the new measure..

PwC's tax accounting group is a team of specialists in current taxes, deferred taxes, internationally accepted accounting principles, management processes for accounting for the tax charge and process optimisation. The experts support both publicly listed companies and middle market companies with individually tailored services.

PwC's services include:

1. Professional advice

  • Analysis and long-term planning of the group effective tax rate: analysis of all factors influencing the effective tax rate. Development of a strategy based on the interaction of the tax laws of all jurisdictions involved with the aim of the lowest effective tax rate in the long term. Implementation of processes to monitor the effects of local planning on the tax charge in the consolidated financial statements. For example, the effect of a potential transaction on the group effective rate should be known before any final decision is taken.
  • Support in developing standardised evaluation systems for tax loss carry forwards: PwC's experts can help a business develop a global system for recording and evaluating tax loss carry forwards. Individual criteria are developed for each group and used by subsidiaries as guidelines when making their own evaluations.
  • Professional advice on specific topics: experts answer questions on specific topics such as deferred taxes and financial instruments, accounting for business combinations, special funds or partnerships.
  • Translation of the tax balances shown in the traditional statutory accounts to the corresponding disclosures in the IFRS or US GAAP financial statements.

2. Audit or review of tax balances in the annual consolidated financial statement and interim reports.

  • Audit or review of the tax charge and balances shown in the consolidated financial statements: the PwC experts audit the system for collating and evaluating the information and ensure that it is up to date with the latest accounting standards and tax rules. The audit extends to the tax-related disclosures in the explanatory notes.
  • Support in optimising tax calculations for the interim reports: tax calculations under IAS 34 to the highest standards of reporting accuracy and efficiency.

3. Process optimisation and Sarbanes-Oxley Act (SOX) testing

  • Optimisation of tax systems: PwC specialists assist business in analysing, assessing and fine-tuning systems so that tax departments work efficiently and in coordination with other departments.
  • Support for tax departments in implementing SOX section 404: PwC's experts help tax departments to introduce risk management and control systems that meet the requirements of SOX 404 and increase the reliability of the financial statements.

Contact us

Heiko Schäfer

Heiko Schäfer

Partner, PwC Germany

WP StB CPA Prof. Dr. Rüdiger Loitz

WP StB CPA Prof. Dr. Rüdiger Loitz

Partner, COO Assurance und Leiter Kapitalmarkt- und Rechnungslegungsberatung, PwC Germany

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